Bakrie seeks court bankruptcy protection
JAKARTA (JP): Publicly listed business group PT Bakrie & Brothers said on Wednesday that it had appealed for court protection from the creditors of its US$1.08 billion debt.
The company's spokesman Lalu Mara Satria Wangsa said that the company had no choice but to ask for court protection because some of the creditors still refused the company's debt restructuring proposal.
With court protection, the widely diversified business group would be allowed to suspend debt payments and to negotiate the debt restructuring proposal under court supervision, he said.
"With this mechanism, Bakrie will be protected from bankruptcy litigation, and in addition, it will also have the chance to push the creditors who refuse the company's debt restructuring proposal to accept the deal," he told The Jakarta Post.
Bakrie started debt restructuring negotiations with its creditors (mostly foreign institutions) in 1998, but has never reached 100 percent creditor approval in order put the debt restructuring deal into effect.
According to the 1998 Bankruptcy Law, the debt restructuring of a company can take place if 50 percent plus one of the total number of the creditors approve the debt restructuring proposal. The above approval must represent at least two-thirds of the value of the debtor's outstanding debts.
But failure to get the majority vote, as stipulated under the Bankruptcy Law, would cause Bakrie Brothers to be automatically declared bankrupt.
Mara said that 76 percent of Bakrie's more than 150 creditors, had agreed with the company's debt to equity and asset swap scheme.
Ninety percent of the holding company's debts are foreign debts, with the remaining 10 percent comprising debts from local banks including debt transferred to the Indonesian Bank Restructuring Agency (IBRA).
The group's creditors include Amex Singapore, Cariploe Singapore, Chase Manhattan Singapore, Deutsche Bank, Dresdner Ltd, IBJ Leasing, Hitochu Corp, The Law Debenture Trust and Westdeutsche Landes Bank Girozentrale.(bkm)